THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

KITTY PILGRIM, GUEST HOST: Thanks, Wolf.

Tonight the Coast Guard promises a full review after it sets off a security scare in Washington. Also President Obama's strategy in Afghanistan grows more complicated. The Senate top Democrat says he's against sending more troops there.

And a bank foreclosure scandal like no other is the incredible story of a bank official, a $12 million beach house and a couple devastated by a Wall Street crook and caught on tape, ACORN workers allegedly giving advice to people posing as a pimp and a prostitute and tonight another tape and more firings.

Good evening everybody.

The Coast Guard caused a security scare in Washington, D.C. today by conducting a training exercise on the Potomac River. The poorly timed exercise on the eighth anniversary of 9/11 took place as President Obama and his motorcade crossed a nearby bridge. Law enforcement agencies were not told of the exercise and scrambled to the river's edge. Now ironically, the Coast Guard is part of the Department of Homeland Security, which was created after 9/11 to make sure law enforcement agencies share information. Jeanne Meserve reports from Washington.

(BEGIN VIDEOTAPE)

(MUSIC)

JEANNE MESERVE, CNN HOMELAND SECURITY CORRESPONDENT (voice-over): As President Obama attended ceremonies at the Pentagon commemorating the largest terror attacks ever on U.S. soil, a camera picked up boats darting and dodging in the nearby Potomac River and this traffic was picked up on a Coast Guard radio channel.

(SOUNDS)

UNIDENTIFIED MALE: "If you don't stop your vessel you will be fired upon. Stop your vessel immediately. If you don't slow down and stop your vessel, and leave our zone you will be fired upon -- bang, bang, bang. We have expended 10 rounds, the vessel is operating at stern. We're going to reassess the situation."

MESERVE: With Coast Guard headquarters providing no explanation, CNN began reporting what it saw and heard. Local and federal agencies responded to the scene at nearby Reagan National Airport, air traffic controllers shut down flights for about 20 minutes as a precaution, until the word came, this was a drill.

VICE ADMIRAL JOHN CURRIER, U.S. COAST GUARD CHIEF OF STAFF: No shots were fired, there was no suspect vessel. There was no criminal activity. This was a preplanned, normal training exercise.

MESERVE: But there had been no notification to federal, state or local agencies, even the Secret Service. Although the president's motorcade crossed over the adjacent memorial bridge as the exercise was underway.

UNIDENTIFIED FEMALE: Oh, my god.

MESERVE: In April, a no notice flight over New York City by a plane used as Air Force One sent panicked New Yorkers into the streets. It turned out only to be a photo shoot. Friday's event on the Potomac raised similar complaints -- Fran Townsend is a CNN consultant.

FRANCES FRAGOS TOWNSEND, CNN NATIONAL SECURITY CONTRIBUTOR: Let's be clear, there was no excuse for having done this when they did it. Second to the extent they decided to do it, it was done incompetently. They didn't follow their own internal process and procedures, they didn't notify other federal agencies as best we can tell. They certainly didn't notify the media.

MESERVE: But White House press secretary Robert Gibbs faulted reporters for jumping too soon, saying "if anybody was unnecessarily alarmed based on erroneous reporting that denoted that shots had been fired, I think everybody is apologetic about that."

(END VIDEOTAPE)

MESERVE: The Coast Guard says it is reviewing today's events to see what lessons can be learned and Senator Susan Collins, ranking minority member on the Senate Homeland Security Committee says she'll be looking into the timing, location and communications to see if this was the wrong time and the wrong place for a routine exercise -- Kitty, back to you.

PILGRIM: Thanks very much -- Jeanne Meserve.

Well, felony stupidity is how a Coast Guard assistant commandant said today's event could be described. Here's more from Fran Townsend who served as homeland security advisor to President Bush and is now a national security contributor for CNN.

(BEGIN VIDEO CLIP)

TOWNSEND: As I once said about the flyover, the buzz over lower Manhattan, it would be felony stupidity if they decided to run a training exercise on September the 11th at about the same time that the president was at the Pentagon. It is inconceivable that any right-thinking person in the government would have approved such a training exercise on this day. (END VIDEO CLIP)

PILGRIM: Now the Coast Guard says it is conducting a full review of its training operations. President Obama caught in the middle of a fight over health care is now at the center of another battle within his own party. It's the war in Afghanistan. And today the top Democrat on the Senate Armed Services Committee, Senator Carl Levin, said he's against sending more troops to Afghanistan. Levin's statement complicates matters for the president. The defense secretary, Robert Gates, said tonight he's considering sending 3,000 more troops there. Dana Bash reports.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CONGRESSIONAL CORRESPONDENT (voice-over): A stark warning from a powerful voice in the president's own party, hold off on sending more troops to Afghanistan.

SEN. CARL LEVIN (D-MI), ARMED SERVICES CHAIRMAN: The larger our own military footprint there, the more our enemies can seek to drive a wedge between us and the Afghan population.

BASH: Senate Armed Services Chairman Carl Levin who just returned from Afghanistan says he believes the president's commander there, General Stanley McChrystal is poised to recommend a large troop increase beyond the 21,000 for combat and training the president approved in March. And in struggling (ph) critical terms Levin said "no more American combat forces should be sent to disrupt the Taliban and al Qaeda until the U.S. accelerates the training and equipping of Afghan security forces."

LEVIN: More trainers, a larger Afghan army, more equipment to Afghanistan now for about six months at least. This is -- these are the steps that I believe that we need to take before we consider additional combat forces.

BASH: Levin's recommendation comes as other Democratic leaders hearing from anti-war constituents are openly uneasy and cautioning the president.

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: I don't think there's a great deal of support for sending more troops to Afghanistan in the country or in the Congress.

BASH: Public support for the war in Afghanistan has dropped dramatically since the president increased troops there six months ago. It is especially low inside the president's own party. Back in February just 33 percent of Democrats supported the Afghanistan war. Now only 24 percent support it, a stunning 74 percent of Democrats oppose the war.

UNIDENTIFIED MALE: Can we trust the Afghan army and police?

BASH: Some liberal Democrats like Senator Russ Feingold are even calling for a timetable to bring troops home from Afghanistan, that's the approach Levin and other Democratic leaders took on Iraq when there was a Republican in the White House. Now there's a Democratic president who campaigned on stabilizing Afghanistan and the main political fight for now is over whether to add more troops, not withdraw.

(on camera): John McCain, now the Senate's top Republican on military matters is blasting Levin's call to hold off on more troops to Afghanistan. He says the lesson of Iraq should be to add more troops quickly in order to clear out extremists, in this case, the Taliban and al Qaeda.

Dana Bash, CNN, Capitol Hill.

(END VIDEOTAPE)

PILGRIM: For much more on the war in Afghanistan, tune in to a special "ANDERSON COOPER 360" tonight, "From the Battle Zone". That's at 11:00 p.m. Eastern?

Well in a dramatic shift, the United States will now enter into direct talks with North Korea. A State Department spokesman immediately denied that it was a breakthrough, insisting there is no policy shift. But previously it was U.S. policy to only talk to North Korea in the context of international "Six Party" negotiations. The State Department attempted to clear up the contradiction saying "if a bilateral discussion will lead us back to the "Six Party" process, why would we not do that? The last meeting of "Six Party" talks was in December 2008.

Coming up our continuing series on health care around the world and tonight health care in the South American country of Chile, also a bank executive living in a foreclosed mansion -- it could be another example of banks using your tax dollar money for their benefit. Also medical malpractice, it's a major cause of rising health care costs, so why are malpractice caps all but ignored in the health care overhaul.

(COMMERCIAL BREAK)

PILGRIM: Members of Congress are battling over the cost of overhauling the nation's health care system. But one major cause of skyrocketing medical costs is malpractice lawsuits and it has received very little attention in proposed legislation. A report from the Congressional Budget Office found that caps on malpractice lawsuits could save more than $4 billion over the next decade. Ines Ferre reports.

(BEGIN VIDEOTAPE)

INES FERRE, CNN CORRESPONDENT (voice-over): Dr. Louis Rose (ph) has been an orthopedic surgeon for over two decades, seeing about 250 patients a week, performing seven to 800 operations yearly. He practices in the Bronx and claims to pay more than $150,000 a year in malpractice insurance.

DR. LOUIS ROSE, ORTHOPEDIC SURGEON: As things become more expensive to have, whether it's malpractice or otherwise and your reimbursement and constraints obviously are going down, it becomes very difficult to consider staying in practice.

ROSE: Medical malpractice, the cost makes up such a significant component of the care, I don't think that without extreme consideration that you could take off any option for containment of medical malpractice off the table.

JOANNE DISBROW, CENTER FOR JUSTICE AND DEMOCRACY: This notion that people are running to court all the time is bogus. Claims have fallen dramatically since the year 2000, for example, only one in eight people who are injured by malpractice even file a claim for compensation. There is an enormous amount of malpractice that nobody is being held accountable for.

FERRE: Both sides of the debate have lobbied Congress about it. In 2008, hospitals, health professionals, pharmaceuticals and insurance companies spent over $162 million on campaign contributions to federal politicians. The legal and law firm industry spent almost 234 million last year. The business of medical malpractice is cyclical. The insurance industry says in 2008 it was profitable with at least $12 billion in premiums earned and 7.9 billion in payouts, defense and litigation.

(END VIDEOTAPE)

FERRE: And doctors say that without tort reform they're forced to practice defensive medicine for fear of being sued. Trying to gain Republican support, President Obama this week proposed looking at certain programs to curb malpractice lawsuits, but his critics aren't convinced that these will go far enough -- Kitty.

PILGRIM: All right, thanks very much. Ines Ferre.

We continue now with our coverage of the health care systems around the world. And tonight the quality of health care in Chile and how it compares to the health care system in this country. Health care in Chile is focused on illnesses that have the most impact on the country. Its system is seen as a success. Life expectancy in Chile is 78 years.

(BEGIN VIDEOTAPE)

PILGRIM (voice-over): The prosperous Latin-American country of Chile offers both public and private insurance systems to its near 17 million citizens. Seventy-five percent of Chileans participate in the public plan, 25 percent choose a private insurer.

TOM BOSSERT, HARVARD SCHOOL OF PUBLIC HEALTH: This competition has led to improvements in the public services and the public insurance and it has also reduced some of the kinds of problems that people have had with private insurance. It's made the private insurance companies more open to not excluding people that had prior conditions and has encouraged them to make better offerings.

PILGRIM: Those employed in Chile, a fairly large part of the population pay seven percent of their income for insurance, either the public or a private plan. A general tax revenue pays for the coverage for the unemployed and the Chilean poor but they must enroll in the public system. Chile spends 5.3 percent of its GDP on health care compared with 16 percent in the United States.

In the past five years, Chile has taken extraordinary measures to change the way it focuses resources for health care. There are currently 56 health conditions and diseases ranked as having the highest burden on the country. They include end stage renal failure, HIV/AIDS, heart conditions and many forms of cancer. Those conditions are completely covered by insurance and treated by a set of protocols established by Chile's ministry of health.

DR. JORGE JIMENEZ, FORMER MINISTER OF HEALTH IN CHILE: The protocols establish the basic things for diagnosis and for the fastest or earliest treatment possible and that's a guarantee. And then you get the treatment that is the best available for the Chilean standards. Of course it's not the best standard in the world, but it's an average treatment that provides effectiveness and cost effectiveness.

PILGRIM: This protocol system has helped provide more equality in treatment in both private and public medical care.

BOSSERT: General surveys of patient satisfaction and public satisfaction with the program have been quite good, so people feel that they're working. And we had worried that the -- that the doctors would be unhappy with the protocols. Doctors tend to want to practice as they have been taught and so we were afraid that they would feel that they were -- that their own independent judgment was being limited. And that's not happened.

PILGRIM: Life expectancy in Chile matches that of the United States at 78 years.

(END VIDEOTAPE)

PILGRIM: Now there was concern that concentrating on the list of 56 health conditions might lead to a lack of attention to many other types of illnesses but that has not been the case. What has happened in Chile is that the investments and improvements in diagnostics and facilities to treat these 56 diseases has spilled over into other types of medicine. Meanwhile, the Chilean government is in the process of expanding the list of covered conditions.

Coming up, a security scare in the nation's capital, it turns out to be a security exercise, also more ACORN employees in trouble tonight for allegedly giving advice to undercover filmmakers pretending to a pimp and a prostitute, and a bank executive living it up in a foreclosed beach front property. We'll have that story next. (COMMERCIAL BREAK)

PILGRIM: Tonight our continuing series, "DOBBS AND JOBS NOW! The federal deficit soared in August to a new record, almost $1.4 trillion, and that could slow job recovery even more as the nation pulls out of recession. Now the country has lost more than 6.5 million jobs since the recession began in December 2007.

And the total number of Americans out of work is estimated at more than 30 million. But there is good news for some American workers. General Motors has rescinded some salary cuts and restored pay for white-collar workers. GM made the cuts last spring as it tried to raise cash before it went into bankruptcy protection. GM emerged from bankruptcy in July.

The company said it needed to bring its pay scale back in line with competitors. The federal government has given GM $50 billion. The government now owns 61 percent of General Motors. U.S. Treasury officials reviewed the plan to rescind the pay cuts.

Thousands of homes across the country sit vacant and vandalized after foreclosure by many banks. And many banks simply ignore the properties. This is not the case for one California beach front property. Its owners lost the home to Wells Fargo Bank, the bank that received $25 billion in taxpayer bailouts. And now a bank executive is reportedly using the home as a personal weekend playground. Casey Wian reports.

(BEGIN VIDEOTAPE)

CASEY WIAN, CNN CORRESPONDENT (voice-over): This $12 million beachfront home in southern California's exclusive Malibu Colony is surrounded by celebrities, walls and a guard gate. It was also once owned by a couple that lost money in Bernie Madoff's Ponzi scheme forcing them to turn the house over to Wells Fargo to satisfy a debt. But instead of selling the house, a Wells Fargo executive moved in with her family on weekends. Neighbors say they entertained guests and even held a party where people were ferried to and from a yacht offshore.

WIAN: These photos are from the Web site of Irene Dazzan-Palmer (ph), a real estate agent who tried to lease the home for the former owners before it went to Wells Fargo in May. The agent tells LOU DOBBS TONIGHT she had a buyer interested in making a cash offer for the 3,800 square foot home in one of California's most exclusive neighborhoods, but she says the bank wouldn't show the property. Sandro Dazzan is her son and business partner.

SANDRO DAZZAN, REAL ESTATE AGENT: We did have a -- an offer (INAUDIBLE) offer but we did not get a response back.

WIAN: Instead the "Los Angeles Times" reports Charanda Geiten (ph), a Wells Fargo senior vice president in charge of foreclosed commercial properties moved in on weekends. She was even issued a homeowner's parking pass by security guards raising the suspicion of neighbors.

WIAN: Geiten (ph) did not respond to phone calls and e-mail seeking comment. Linda Livingstone (ph) is head of Malibu's Pepperdine University's Gracia Dio (ph) School of Business. She says it's likely the case is already being discussed in class.

LINDA LIVINGSTONE, DEAN, PEPPERDINE UNIV. SCHOOL OF BUSINESS: It certainly could just be very poor judgment on the part of an individual. It could be issues related to how the company had -- has laid out its policy and the extent to which they have actually enforced the policy in the past.

WIAN: Wells Fargo said it would not comment on Geiten's (ph) actions for privacy reasons. It also said in a statement quote, "Wells Fargo's code of ethics and business conduct handbook instructs team members to avoid conflicts of interest or the appearance of conflicts of interest in their personal and business activities." The bank added that it will be conducting a thorough investigation.

(END VIDEOTAPE)

WIAN: Wells Fargo also says the house was kept off the market for a period of time because of an agreement with the previous owners and that it would be put up for sale soon -- Kitty.

PILGRIM: Warrant that everyone will be reading that handbook very closely this weekend.

WIAN: Absolutely, you would expect so.

PILGRIM: Thanks very much. Casey Wian.

Well this isn't the first time Wells Fargo has seemed to show little regard for the taxpayers that kept the bank afloat. We reported back in February that Wells Fargo was planning a 12-day corporate junket to Las Vegas. The bank canceled the event after our report. Wells Fargo had a long tradition of very pricey junkets and they included helicopter rides, horse back riding in Puerto Rico and a Jimmy Buffett concert in the Bahamas for more than 1,000 employees and guests.

A reminder to join Lou on the radio Monday through Friday for "The Lou Dobbs Show" -- go to loudobbs.com to find the local listings for "The Lou Dobbs Show" and to subscribe to the daily Podcast. You can also follow Lou Dobbs at loudobbsnews on Twitter.com.

Coming up, another controversy surrounding the left wing activist group ACORN -- we'll tell you all about it. And tonight's "Face Off" debate, what are the chances of a bipartisan deal on health care? We'll hear from both sides. And is this track star who she really says she is? We'll have new information on that controversy next. (COMMERCIAL BREAK)

PILGRIM: Republicans and Democrats remain divided on the health care legislation, but is it still possible to reach a bipartisan agreement on the health care overhaul? Well that's the topic of the "Face Off" debate tonight.

And joining me now is Matt Miller, senior fellow for the Center for American Progress. He is also the author of "Tyranny of Dead Ideas". And Reihan Salam, fellow at the New America Foundation and he's also the co-author of the "Grand New Party". Gentlemen, thanks very much.

Let's get right to it. Is it possible for Democrats and Republicans to get together on this? Matt, I'll start with you.

MATT MILLER, CENTER FOR AMERICAN PROGRESS: It should be. But I'm sad to predict that I think they won't in the end. The reason it should be is that if you look at what Obama laid out this week in his speech, by taking the public option, essentially to the side, saying that that's probably not going to be part of any final deal, what that leaves him doing is essentially embracing Mitt Romney's plan for Massachusetts, because that's basically the model for what the big health forum is and he's going to fund it in part using John McCain's best idea from the presidential campaign which was to limit the tax exclusion on employer provided care, which he signaled again in his speech that he would.

So if Republicans can't embrace a kind of Romney-McCain health care plan, it's hard to know what they would embrace. The sad thing is I think that the party -- the Republican Party has made the calculation, just like they did in '94 in the Clinton era, that it's not good politics for them to let Obama and the Democrats have such a big victory on health care and I think they're going to try and do everything they can to foil it.

PILGRIM: Reihan, do you agree with that?

REIHAN SALAM, THE NEW AMERICA FOUNDATION: I actually think that President Obama has agreed to a complicated type of excise tax on expensive insurance plans. That's not really the ideal way of doing this. The idea (INAUDIBLE) embraced is high risk insurance pools, which is an idea embraced across the spectrum, but I unfortunately think that we still haven't owned up to quite how much this is going to cost. I think the cost might be worth it, but I think the public would appreciate and Republicans might appreciate it if we leveled a bit more about how much it's going to cost.

PILGRIM: We have seen movement on the public option this weekend, and that actually like took everyone by a bit of surprise. What other points really need to be compromised? What are the real sticking points on this? Reihan, I'll start with you.

SALAM: I think a really big issue is when you're telling the private insurers that they're not allowed to engage in risk selection, which is something that you need to do, it's something that Republicans and Democrats agree on. You actually have to give them something in return. And I think that's why we need something along the lines of re-insurance. There's talk about this, but the details are very, very vague and I think that that's a big, big issue that we haven't seen addressed at all.

PILGRIM: Matt, thoughts on what else...

MILLER: Well the one thing I'd say though just on the cost, which Reihan brought up is, I know it sounds like a lot, 900 billion over 10 years, but that's barely one-half of one percent of GDP over 10 years, so the idea that America can't afford to do this, especially when Obama is committed to actually paying for it and offsetting it with savings or tax increases elsewhere, which again, it's not what we did for Iraq war, it's not what we did with the big increase in Medicaid prescription drugs under President Bush, it's not what we did with the Bush tax cuts back in his term. I think it's totally affordable and the idea that it's something we can't afford to do as a country just doesn't make sense.

SALAM: See, that's the thing, I don't think that we can't afford a health care reform, I think we need to be more open and honest about what the costs are. That $900 billion number that we heard relies on a lot of assumptions. And what I am saying is, let it costs more than that, if it needs to cost more than that, but let's be honest about what it's going to cost and what we're going to have to pay in taxes.

I think the American public, after eight years of President Bush felt frustrated, they felt lied to. If President Obama has simply said we need to provide health coverage for everyone, but we also need to pay for it and we need to do that in an open and transparent way, you would not have seen the town halls and the Republicans would be in a much tougher position trying to make the case against this reform.

PILGRIM: You know Matt, you have said that the Democrats have framed this argument wrong all along, that they focused too much on covering the uninsured. Why do you say that? Because certainly that seems to be one of the biggest issues, here.

MILLER: It's a big issue, but I think the important things, which the president began to do in earnest this week was for the 85 percent of Americans who already have health coverage what is in this for them.

And there's a lot because if you've got health coverage there's the risk you could lose it, if you switch jobs you could lose it, if you have preexisting conditions, you can lose it, and so health coverage is very insecure and there's a lot that's been agreed to in terms of the insurance reform to stop preexisting conditions from being a bar, to place the kind of caps so no one can go bankrupt from getting ill, which is shameful in the United States.

And all that stuff the insurers themselves have agreed to is part of the deal that Obama's talking about and I think most Republicans would buy into that as well. So, again, there's room for a bipartisan deal if we could change a little bit of the political dynamic. SALAM: We have new numbers on the Census, this week, on the number of folks who are covered by employer based coverage. That number has shrunk dramatically. And I think the problem is when you're sauntering the campaign, John McCain suggested a big shift away from employer provided coverage and he got demagogued for it. And I think the truth is that employer provided coverage has to go and I think that President Obama would have served us all very well if he had been open about that.

PILGRIM: All right, Matt, last thought from you.

MILLER: Well, the truth is I think that Reihan and I would agree that we need moved beyond employer based health care and I think in some ways it's a paradox that McCain's idea on that was even too radical for the current political environment. But McCain also didn't want to do the insurance reforms you would need to actually make sure people got group coverage at the same time.

But, I do think if we start with what Obama's talking about, people will get coverage outside the employer setting that can set in motion a move beyond the employer based system that's good for all of us.

PILGRIM: Reihan, last question for you. Your party, what kind of political fallout might we see from this and especially with the midterm elections?

SALAM: Well, this is very tricky because I think the 2010 elections are going to have a lot of angry seniors coming out to vote and not a lot of the younger people who backed Obama and the Democrats the last time around. So, I think that it could be a political win, but I think it's a long term loser for the Republican Party if they don't try to come up with a workable solution.

PILGRIM: And Matt, the down side risks for the Democrats?

MILLER: The risk is in not doing anything, and I think all the Democrats know that. And something, I think, substantial is going to happen. There's some question on the details, but I think the odds are we're going to get a major health reform that's very good for the country, very good for people who are insured, it will give them more security, it will give people access to more coverage who don't have it today. We'll all have to come back year after year to figure out how to bend the costs curve, because that's gong to be something we're still going to be living with.

That's very true.

Thank you very much, gentlemen for this discussion. Reihan Salam and Matt Miller, thank you.

Ines Ferre now has on update on other stories that we're following, tonight -- Ines.

Thanks so much, Kitty. Well, the Coast Guard is promising a thorough review tonight after a training exercise in the Potomac River caused a security scare in our nation's capital this morning. The exercise involved a Coast Guard vessel in the Potomac stopping a boat that was passing through the area.

The training took place near the Memorial Bridge where President Obama's motorcade was crossing after a 9/11 memorial at the Pentagon. The training exercise included reports on police scanners of shots fired. Other agencies were not notified of the exercise in advance, including the U.S. Secret Service which protects the president.

And there's good news about the battle against Swine Flu. Researchers have found a single shot of Swine Flu vaccine is enough to protect adults against the virus. The need for just one shot effectively doubles the vaccine supply and may help people get immunized faster. The shot protects healthy adults within eight to 10 days. World Health officials had expected two shots to be required over three weeks.

And there's new information, tonight, concerning controversial South African running star Caster Semenya. After rampant speculation that she is a man racing as a woman, there are reports that gender tests shows that she has both male and female sex organs. Semenya won the gold in the 800 meter race at the World Athletics Championship in Berlin, posting the fastest woman's time in the world this year, 1:55:45. The International Governing Body for Athletics ordered gender tests that event, but is urging caution as they wait for final results.

And those are some of the stories that we're following tonight -- Kitty.

PILGRIM: Thanks very much, Ines,

Still ahead, fighting with his own party over health care and the war in Afghanistan. What is next for President Obama?

And more trouble for the left-wing activist group ACORN, more workers allegedly giving illegal advice.

(COMMERCIAL BREAK)

PILGRIM: There is more trouble tonight for the left-wing activist group ACORN. Two more employees have been fired after the release of a second videotape showing workers illegal giving advice to filmmakers who were posing as a pimp and a prostitute. Now, this is the second tape made public in two days. It's just the latest chapter where ACORN appears to be on the wrong side of the law. Bill Tucker has our report.

BILL TUCKER, CNN NEWS CORRESPONDENT (voice-over): For the second time in as many days, a video has been posted on the internet of ACORN Employees appearing to give illegal tax advice to a prostitute who's looking to establish a brothel using underaged prostitutes from El Salvador.

The latest video was secretly recording at the Washington, D.C. offices of ACORN a group that says its overriding mission is providing housing assistance to the poor. in a statement issued Friday by the head of the ACORN D.C. office, it was announced that the employees in the video had been fired. "We have fired them and are initialing an internal review of practices reminding all staff of their obligations to uphold the highest legal and ethical standards."

On Thursday, a similar scenario was shown in a video shot in the Baltimore office of ACORN

UNIDENTIFIED FEMALE: Your business is a performing artist. Which you are, OK, so you not lying, we'll play on words.

TUCKER: The two employees in that video were described as "part time" by the head of the ACORN office in Baltimore. They no longer work for ACORN

SONYA MARCHANT, ACORN BALTIMORE: The two employees that were filmed in the video were immediately dismissed because they did not follow the protocol of this organization.

TUCKER: ACORN's legal council says the woman in the video denies ever giving tax advice to a pimp or a prostitute. ACORN's spokesman Scott Levenson vehemently denounces the Baltimore taping saying, "Our position is that this film is doctored. It is not an accurate portrayal of what happened in our Baltimore office and we are likely to take legal action. In fact, we already have legal opinions that it is likely that a felony was committed."

ACORN, which is active in hundreds of neighborhoods in 41 states, claims that the two activist filmmakers responsible for posting the videos tried the same thing at their offices in San Diego, Los Angeles, Miami, New York and Philadelphia and failed.

ACORN gave CNN a copy of the police complaint filed against the filmmakers In Philadelphia. The filmmakers, James O'Keefe and Hannah Giles are not commenting and Giles was a no-show for an agreed-to interview with CNN. Congressman Steve King of Iowa wants a federal investigation of ACORN.

REP STEVE KING (R), IOWA: We've got to audit them completely, every single affiliated corporation that they have. There should be a Deportment of Justice complete forensic audit. We need to do congressional investigations and we need to shut off every dime going to ACORN until such time as they can have a clean bill of health.

TUCKER: The latest episodes come the heels of a variety of charges of voter registration fraud.

(END VIDEOTAPE) ACORN is under investigation in at least 10 states for voter registration fraud and just this week, arrest warrants for 11 ACORN voter registration workers were sworn out on charges of registration fraud in Florida in an investigation that ACORN did help initiate. In Nevada, ACORN officials are fighting criminal charges for creating a voter registration incentive program base on the number of voters registered, which is illegal under Nevada law.

Now, ACORN has called those charges political grandstanding by the secretary of state and the attorney general there, who, Kitty, both happen to be not Republicans, but Democrats.

PILGRIM: Bill, tonight we're also learning that the Census is cutting ties with ACORN for the 2010 Census. What do you know about that?

TUCKER: A letter went out this evening from the Census Bureau to the president of ACORN announcing they no longer wish to be affiliated with them and they're ending a partnership arrangement with them. ACORN has responded saying there was never any funding at stake in this, there were no programmatic relationships or commitments that needed to be made and that they are going to connote to encourage people to participate in the Census. But this has got to be just another big blow to ACORN, Kitty, it's been a rough week for good reason and it ends with the Census Bureau saying thanks, but no thanks.

PILGRIM: Excellent reporting. Thank you very much, Bill Tucker.

Well, joining me now from Washington is Ron Christi, he's the president of Christi Strategies and former special assistant to President George W. Bush. Here in New York, Republican strategist and CNN contributor Ed Rollins. End Ed was also White House political director under President Reagan. "New York Daily News" columnist and CNN contributor, Errol Louis. And Democratic strategist and CNN contributor, Robert Zimmerman. Gentlemen, thanks for being with me.

Let's start with ACORN, Robert, thoughts on this whole saga that's evolved over the week.

ROBERT ZIMMERMAN, DEMOCRATIC STRATEGIST: I can't speak to the quality or the integrity of these conservative filmmakers and I certainly wouldn't say that ACORN Is representing job growth by with the advice they're giving, here, certainly, or job development. The bottom line is these are serious issues and ACORN does not do itself any service when they're not straight forward or candid, for example when they came on this program and denied there were any investigations they were facing until Lou Dobbs set them straight and laid out the record. So, their lack of candor and their lack of transparency is truly hurting any potential hope they have to, in fact, establish credibility.

PILGRIM: Ron, I'll go to your next.

RON CHRISTIE, CHRISTIE STRATEGIES: I agree with Robert on this. I think that they have been less than candid in some of their dealings not only with the federal government, but with the state governments around the country. And these are very, very serious charges that Bill outlined in these report previously, Kitty. I mean, if you're talking about people who are under investigation, people have been arrested for voter fraud registration and now you're talking about the potential of federal funds for an organization that's devoted to helping people with federal housing and poor people who are seeking housing, there are very serious charges and I think Representative King was right, we do need a forensic audit and a full investigation.

PILGRIM: So, certainly tax payers must be outraged with this -- Errol.

ERROL LOUIS, NEW YORK DAILY NEWS: I'm not so sure about that. As a taxpayer, I don't know if I'm outraged. I mean, certainly you should investigate any instances of wrong doing, but when I hear the representative saying we have to shut them all down, it sounds to me like what I've known has gone on and what I think everybody knows has gone on for 50 years which is, if you go out and you register a lot of poor people, there are a lot of powerful interests who are going and shut you down. And I think that kind of overreaching, that kind of overstepping, the notion that you would shut down an entire national organization based on what looks to me like a prank, basically, this film stuff, that they tried in a bunch of states and found three or four workers out, you know, who knows, of hundreds or even thousands of workers nationwide, I think this needs a little bit of a cooling off, so that we can think through what's going on here and have people respond to it appropriately and responsibly.

ED ROLLINS, REPUBLICAN STRATEGIST: Nice try, Errol. This organization has been under investigation for a long, long time, there's hundreds of millions of dollars of federal money. I hope that in lots of places they're doing good work and they should clear their name. But at the end of the day, when there is accusations of voter frauds in 10 or 12 or however many states, you need to look at it hard before you continue to put federal money into their pockets.

PILGRIM: All right, let's move on to another controversy this week and that is Joe Wilson, he has now come out with a video defending his outburst during the president's speech on health care. Let's listen to just a quick clip of that.

(BEGIN VIDEO CLIP)

REP JOE WILSON (R), SOUTH CAROLINA: On these issues I will not be muzzled, I will speak up and speak loudly against this risky plan.

(END VIDEO CLIP)

PILGRIM: Now some say that he's actually helped the Democrats united through his outburst.

ZIMMERMAN: Congressman Wilson's problem is not the need to be muzzled, he needs to be medicated. And it's not just his outburst that's the issue, it's that he represents exactly why the right-wing has destroyed the integrity and the credibility of the Republican Party. In the middle, toward the end of that speech, Congressman Shimkus walked out of it, then we had, of course, former Speaker Newt Gingrich refer to Justice Sotomayor as a racist. Of course, we have the philosophical leader of the Republican Party, Rush Limbaugh, articulating divisive and hateful rhetoric. I mean,- maybe the way to deal with this national health program is to put federal funding in there for anger management and put the GOP at Betty Ford because they truly are a party that's become controlled by the lunatic fringe that has destroyed their credibility and their effectiveness.

PILGRIM: Let's get Ron in on this -- Ron.

CHRISTIE: Well, I think Representative Wilson acted inappropriately and he apologized for his comments and the president accepted that and the president wanted to move on.

What I final troubling about this, Kitty, is I think the Democrats are trying to make political hay out of this, they conveniently forget that the majority leader of the United States Senate, Harry Reid, called President Bush a liar on national television, not once but twice, there was no level of outrage. I think the Democrats control either Pennsylvania Avenue, they need to close the deal with the health care plan and convince the American people that it's in their best interests rather than continuing to score partisan points. I think they need to move on.

PILGRIM: Has this actually moved the debate on, though -- Errol.

LOUIS: No, not at all. It's actually perfectly timed to illustrate the president's point, right at the point of the speech where he was saying members of Congress are acting like talk show hosts, that they're being reckless and irresponsible. And there you have Representative Wilson bringing the point home. For Democratic fundraisers, I think it's a god send, they'll be using it to raise money I think for probably a couple of years. And it's does make clear to independents, anybody who was anywhere on the fence. I mean, I have been watching presidential addresses since I was a kid, going back to Nixon, and never seen anything like this. Nobody wants to be associated with it.

PILGRIM: We'll get right back to this in a minute, I won't leave you out, Mr. Rollins. And we'll be back with our panel in a moment. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: We are back with our panel and I turn now to Ed Rollins. We were talking about Joe Wilson and the outburst.

ROLLINS: It's an outrageous comment, I think, and he quickly apologized. But what's happened to him is he's now gone back home and he's a hero. He could probably be the next governor of South Carolina if he promises not to get a mistress in Argentina.

(LAUGHTER) You know, I mean, he's found great popularity back home, but I don't think the behavior was proper behavior and I think to a certain extent we need to get rid of all this stuff and start talking about the issues. There's a big issue difference between us and the Democrats on these things.

PILGRIM: We have very little time left, but I'd like to go to each of you and ask you, where do we go next in this whole health care process? Ed, I'll start with you.

ROLLINS: The Democrats, I mean, obviously they've got a battle among themselves. I think there will be a bill, I think it will be called HR3200 and it will be 1,000 pages and "to be conditioned" at the end of it because they are not going to finish what they want here, but I think they are definitely going to end up with something.

LOUIS: I think the White House wait for the Baucus committee to put out something. If they don't like it, they ride over him and they go ahead and put out their own plan.

PILGRIM: All right. Ron?

CHRISTIE: I think the Democrats have to give President Obama a victory in health care. He's put so much of his political portion into this. At the end of the day, the public option is out and I think the cost is going to be the devil in the detail. Hopefully somewhere in the 700 trillion -- 700 billion range.

PILGRIM: Yes. And Robert?

ZIMMERMAN: I predicted many months ago there would be a health care legislation passed by the Democratic Congress. And what you have is a real philosophical divide amongst Democrats but they are coming together because of the urgency of the matter. And as the Congressman Clyburn pointed out, civil rights was not done in one bill, it was done over several years and so this is really an important first step and this piece of legislation is the beginning of the process and I think it's really going to be an historic achievement.

Still ahead, "Heroes." Tonight, the story of Maine who performs one the most dangerous duties in a war zone. Stay with us.

(COMMERCIAL BREAK)

PILGRIM: And now "Heroes," where we honor the brave men and women who server this country in uniform. Tonight, gunnery Sergeant Matthew Small, a third generation military man, he has served three tours in Iraq over the past decade. In his last tour, Sergeant Small performed an extremely dangerous duty as an explosive ordinance disposal technician. Philippa Holland has his story.

SMALL: The Improvised Explosive Device is only limited to the imagination and the creativeness of the bomb maker.

HOLLAND: The Explosive Ordinance Unit safely disposes these IEDs and explosives, sometimes using a robot.

SMALL: Whether it's an unexploded ordinance, a mortar or and IED or if they happen to find a large amount of explosives in a cache, that's where we come in.

HOLLAND: In 2008, Sergeant Small deployed to Iraq, supporting three of the battalions in the city of Fallujah. He risked his life clearing over 40 IEDs. On two occasions he disarmed the IEDs by hand.

SMALL: All of our tools, because of the terrain and the time of day and the location, just again, it wasn't -- they weren't feasible locations.

HOLLAND: Small successfully located and disarmed a number of explosive devices.

SMALL: The first thing that happens to me, when I get out of the truck, is I usually end up hum the last song I heard on the radio. I kind of threat it like there's nothing there. You know? Before you know it, it's over, it's taken a pot or it's gone off. I've been lucky so far.

HOLLAND: Sergeant Small was awarded the Bronze Star with Valor.

SMALL: You have to have an overabundance of common sense. There's a lot of information, there's a lot of ordinances, a lot of things that you need to know to get your job done.

Our DOD techs have done a lot of research...

HOLLAND: Training is essential, these days. Small is section leader of First Platoon as they prepare for deployment to Afghanistan.

SMALL: Different country, different war. So, day to day we're given classes, whether it's a cultural awareness class or things that we need to know about going into a different nation to a different fight.

HOLLAND: Philippa Holland, CNN.

(END VIDEOTAPE)

PILGRIM: Our very best wishes to Gunnery Sergeant Small. And now a newlywed, he and Rater Nickerson (ph) were married last month and we thank Sergeant Small and all the men and women who serve this country in uniform.

Well, across the country, tonight, remembering the heroes of September 11. Near Shanksville, Pennsylvania, a crowd gathered at a field where the 40 passengers and crew of United Airlines Flight 93 died. Those victims are honored for fighting their hijackers and preventing the plane from reaching our nation's capital.

At the Pentagon, the president laid a wreath commemorating the 184 live lost when a hijacker jet smashed into the building. President Obama designated today as a day of service and remembrance.

And here in New York where the World Trade Center Twin Towers once stood, moments of silence at the exact time each plane crashed the buildings and at the moment each tower fell. Family and friends as well as the vice president gathered to hear the role called of all 2,752 victims.